Owner Equity Accounts:
There are several types of transactions that effect owner equity including: investments, withdrawals of cash by the owner, revenue earned, and expenses incurred. The accounts that collect data from these transactions are:
Capital Account – The companies net worth. Initial and subsequent Investments are recorded here as well as changes in the equity of the owners; such as net income or loss. Capital stock represents the investment of stockholders for corporations, and retained earnings represents the net income/loss.
Drawing Account – Also known as the Personal Account, this account is used to record withdrawals from the company by the owner or owners.
Revenue Accounts – The gross increases to owner’s equity. Sources include sales of merchandise or services, rental properties, lending money, commissions, and other income generating ventures.
Expense Accounts – The costs incurred during the day to day operation of the business are expenses. Examples include, Salary Expense, Supplies Expense, Utilities Expense, and Rent Expense..